Home Motoring Cars will become more affordable in the coming years, says WesBank CEO

Cars will become more affordable in the coming years, says WesBank CEO

Cars will become more affordable in the coming years, says WesBank CEO

Johannesburg – With the global automotive market currently crippled by shortages, vehicle prices have risen as the supply-demand pendulum swung in favour of manufacturers.

But the vehicle affordability outlook for South Africa is looking set to improve in the next few years as global economies recover from the effects of the pandemic, says WesBank CEO Ghana Msibi.

“As the South African GDP continues to take strain and our inflationary forecast sees two interest rate increases within the next six months, we believe the situation in the local economy will begin to improve with decreases in the repo rate and that the economy will normalise in 2024,” Msibi said.

“We also expect the supply shortage of certain automotive components such as semiconductors to improve in the medium term and for the current logistical turmoil in the world to ease, together with lower shipping costs. These developments will help world economies, including South Africa, by cutting operating costs.”

Another big milestone, Msibi adds, will be when China starts firing on all cylinders again. China’s zero Covid-19 policy has led to numerous plant shut downs, but once these are a thing of the past, component availability for the entire global vehicle market is expected to improve significantly.

“The improving global and local economic situations will be beneficial in improving vehicle affordability, but locally there are calls from consumers and industry commentators for the government to cut duties and taxes to improve affordability,” Msibi said.

“However, the government’s finances are currently so constrained that they will be hard stretched to make these cuts. I believe what is needed are infrastructural projects that will not only boost the economy but also create jobs and much needed employment. This, in turn, will mean more people paying tax to grow the fiscus.”

The vehicle market has shown some impressive year-on-year gains in 2022, and WesBank expects market activity to grow further in 2023.

The vehicle market is looking likely to top the 500 000 mark by year-end, says WesBank marketing head Lebogang Gaoaketse. In fact, year to date the market has grown by just over 50 000 units, versus the same period last year, which is effectively a full sales month all on its own.

“With the rise in interest rates last month and the economic outlook provided by the mid-term budget, South African consumers are faced with a balancing act of affordability versus a growing need to replace their vehicles, a decision largely delayed over the past two years given the pandemic. It provides a cauldron of opportunity for the motor industry to meet the needs of motorists,” Gaoaketse said.

IOL Motoring

Original Article